Coronavirus finance/economy shizzle

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Preachs PA

What scares me with the current uncertainty is what happened to my father in law who was hit by the Equitable Life scandal. He'd saved a big pension pot, then all the Equitable Life pensioners ended up getting ripped off when it went tits up. He managed to salvage only about a third of his hard earned pension pot through the legal processes. It's always put me off.

I think as long as you use appropriate channels the lessons have been partially learnt though there are still small scale ne’er do wells about. You probably will have options to either take it as an annuity (assuming it is a DC fund and not a DB) or possibly transferring into a SIPP with someone like Hargreaves Lansdown(others are available) where you can optionally invest it still but drawdown also using the new mechanisms that are available. But as per earlier post, all depends where this pension sits in your planning/requirements as to what to do. Think you can access advice through pension wise or some such unless your employer/sector has some financial advisors to do with your other pensions who maybe able to advise on all your situation rather than each individual pot

Manager - East Cheam FC

Just to follow up the comment about the FTSE, and this is probably an unfair comparison, but here goes anyway - The Toronto Stock Exchange in February was around 17,500. At its nadir in March it had dropped to 11,000. As I write this it's 15,200. I think that's an excellent recovery to date. However, yes, there's a lot of volatility hovering around - the world is out of sync now and that will take an extended period to correct. Plus, if this virus mutates, comes at us again in waves, or the global community underestimates the threat we'd all better be prepared for the proverbial roller coaster.

PNE Exile

What scares me with the current uncertainty is what happened to my father in law who was hit by the Equitable Life scandal. He'd saved a big pension pot, then all the Equitable Life pensioners ended up getting ripped off when it went tits up. He managed to salvage only about a third of his hard earned pension pot through the legal processes. It's always put me off.

Forum Patron

Er... you started speculating the minute you bought your FTSE (or similar) funds

Personally, I think that you are almost always right in that advice- but IMO, there are occasions (that come along very infrequently) when believing the advice to be infallible is highly highly dangerous. I almost wonder if IFAs are brainwashed into missing this vital point.

Let’s go back to the first week of March. The FTSE had fallen from about 7400 to 6750 in the previous week. All the selling sentiment was there for all to see and also clear was that the virus was going to kill the economies of the world. Football leagues were being cancelled- and 6-Nations, mass gatherings, marathons etc. The risks involved in selling were very small. Everyone knew the markets were going to head south very soon. And even if they were wrong, no way were they going to surge upwards.

IMO, a second BIG fall is coming (probably not as blatantly obvious this time, but >90% chance). Again, I might be wrong, but once the FTSE surged well beyond 6000 in midweek, selling IMO became a “free bet” again. If the fall didn’t come, then it’s very unlikely that 6100 was a big undervaluation, so with discipline, there was no big downside.

Manager

Er... you started speculating the minute you bought your FTSE (or similar) funds

Personally, I think that you are almost always right in that advice- but IMO, there are occasions (that come along very infrequently) when believing the advice to be infallible is highly highly dangerous. I almost wonder if IFAs are brainwashed into missing this vital point.

Let’s go back to the first week of March. The FTSE had fallen from about 7400 to 6750 in the previous week. All the selling sentiment was there for all to see and also clear was that the virus was going to kill the economies of the world. Football leagues were being cancelled- and 6-Nations, mass gatherings, marathons etc. The risks involved in selling were very small. Everyone knew the markets were going to head south very soon. And even if they were wrong, no way were they going to surge upwards.

IMO, a second BIG fall is coming (probably not as blatantly obvious this time, but >90% chance). Again, I might be wrong, but once the FTSE surged well beyond 6000 in midweek, selling IMO became a “free bet” again. If the fall didn’t come, then it’s very unlikely that 6100 was a big undervaluation, so with discipline, there was no big downside.

From my perspective, speculation refers to buying and selling to achieve short term gains or avoid losses. Very different from investing, where you’d allow a significantly longer time period to ride out volatility.

What you seem to be missing about IFAs, is that they are quite stringently regulated, and are for the most part not investment ‘experts’. They are not in a position where they can go out on a limb trying to second guess the market. Many will act very differently when it comes to their own investments, for better and for worse.

Whether you’re right or wrong about certain ups and downs, the risk associated with any short-term call would be too high for most people.

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From my perspective, speculation refers to buying and selling to achieve short term gains or avoid losses. Very different from investing, where you’d allow a significantly longer time period to ride out volatility.

What you seem to be missing about IFAs, is that they are quite stringently regulated, and are for the most part not investment ‘experts’. They are not in a position where they can go out on a limb trying to second guess the market. Many will act very differently when it comes to their own investments, for better and for worse.

Whether you’re right or wrong about certain ups and downs, the risk associated with any short-term call would be too high for most people.

Fine. Many would agree with the general thrust. Playing the long game is indeed almost always the right thing to do but IMO, this has led many Investment experts/IFAs to turn off their brains whenever a downturn approaches. Occasions when it is right to de-risk by liquidating equities may only arise once or maybe twice in an investor’s entire career. First week of March was such an obvious example but instead, the experts were blinded by their training and lifelong mantra and just put out “reassuring” statements to their clients- before being hit by a bus!

By the way - I never said you’d recently bought in. I do understand the role of IFAs and I obviously understand that we’re talking about long term investing. I only assume you paint a different picture just to be aggravating. Or maybe you don’t feel able to express your opinion with using such tactics.

Preachs PA

Fine. Many would agree with the general thrust. Playing the long game is indeed almost always the right thing to do but IMO, this has led many Investment experts/IFAs to turn off their brains whenever a downturn approaches. Occasions when it is right to de-risk by liquidating equities may only arise once or maybe twice in an investor’s entire career. First week of March was such an obvious example but instead, the experts were blinded by their training and lifelong mantra and just put out “reassuring” statements to their clients- before being hit by a bus!

By the way - I never said you’d recently bought in. I do understand the role of IFAs and I obviously understand that we’re talking about long term investing. I only assume you paint a different picture just to be aggravating. Or maybe you don’t feel able to express your opinion with using such tactics.

But again that depends on the diversity and setup of each portfolio so advice for one may not suit another. Looking at my stuff since 1st march I reckon I'm 4% up by doing nothing. So even in complete turmoil that's equating to 20%+ a year. As per one of my earlier posts and similar to what loathsome said, if you are trading i.e. in and out each day then that is where you probably do need to be jumping in and out whereas if you are invested (and actively investing each month) then dripping in whilst the markets dropped you get the benefit of buying in low. No strategy is perfect but reacting and panicking isn't necessarily a good idea as you do lock in any losses the minute you sell potentially

Manager

Fine. Many would agree with the general thrust. Playing the long game is indeed almost always the right thing to do but IMO, this has led many Investment experts/IFAs to turn off their brains whenever a downturn approaches. Occasions when it is right to de-risk by liquidating equities may only arise once or maybe twice in an investor’s entire career. First week of March was such an obvious example but instead, the experts were blinded by their training and lifelong mantra and just put out “reassuring” statements to their clients- before being hit by a bus!

By the way - I never said you’d recently bought in. I do understand the role of IFAs and I obviously understand that we’re talking about long term investing. I only assume you paint a different picture just to be aggravating. Or maybe you don’t feel able to express your opinion with using such tactics.

The idea that selling because you think prices will go down constitutes de-risking is just plain wrong. Using your example, once markets have fallen, when is the right time to buy again? If you get lucky at the point of sale, there is no guarantee that the money goes back in at a favourable point.

I don’t really care what you personally do with your own money, or how you think markets will move in the coming months. You’re a classic case of where having a little knowledge is dangerous. It’s the suggestion that people should blindly sell because things aren’t going well, that I have a problem with.

I just thought it was a reckless suggestion from someone who is quite sensible usually, and well regarded as a consequence. Regardless of who’s right/wrong, I just thought I’d challenge your view. Sorry if that upset you.

Manager - East Cheam FC

On Monday, May 4 at 12:01 a.m., if they are following the proper health and safety guidelines, the Province of Ontario said that these businesses will be permitted to begin operations:

Garden centres and nurseries with curbside pick-up and delivery only.

Lawn care and landscaping.

Additional essential construction projects that include: shipping and logistics; broadband, telecommunications, and digital infrastructure; any other project that supports the improved delivery of goods and services; municipal projects; colleges and universities; child care centres; schools; and site preparation, excavation, and servicing for institutional, commercial, industrial and residential development.

Automatic and self-serve car washes.

Auto dealerships, open by appointment only.

Golf courses may prepare their courses for the upcoming season, but not open to the public.

Marinas may also begin preparations for the recreational boating season by servicing boats and other watercraft and placing boats in the water, but not open to the public. Boats and watercraft must be secured to a dock in the marina until public access is allowed.

“In the coming days and weeks, I am hopeful that we will meet more of our health targets.” Premier Doug Ford continued. “I am very optimistic that in the near future that we will be able to announce additional businesses will be able to open up safely.”

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The idea that selling because you think prices will go down constitutes de-risking is just plain wrong. Using your example, once markets have fallen, when is the right time to buy again? If you get lucky at the point of sale, there is no guarantee that the money goes back in at a favourable point.

I don’t really care what you personally do with your own money, or how you think markets will move in the coming months. You’re a classic case of where having a little knowledge is dangerous. It’s the suggestion that people should blindly sell because things aren’t going well, that I have a problem with.

I just thought it was a reckless suggestion from someone who is quite sensible usually, and well regarded as a consequence. Regardless of who’s right/wrong, I just thought I’d challenge your view. Sorry if that upset you.

There are ways of challenging in a sociable way... and then there's your way. If you're going to take the tone you're taking in this exchange, it would be good if you actually put forward a shred of evidence to refute my argument. All you've done is throw out all the clichés.... the ones that I have always completely agreed work 99% of the time.

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But again that depends on the diversity and setup of each portfolio so advice for one may not suit another. Looking at my stuff since 1st march I reckon I'm 4% up by doing nothing. So even in complete turmoil that's equating to 20%+ a year. As per one of my earlier posts and similar to what loathsome said, if you are trading i.e. in and out each day then that is where you probably do need to be jumping in and out whereas if you are invested (and actively investing each month) then dripping in whilst the markets dropped you get the benefit of buying in low. No strategy is perfect but reacting and panicking isn't necessarily a good idea as you do lock in any losses the minute you sell potentially

This is a really different argument altogether. I very specifically said sell sell sell (in a pretty light-hearted way) in relation to the FTSE100 surging on Wednesday - "guaranteeing" that it would fall back within a week. (FWIW, it closed at 6115 on Wednesday, and 48hrs later, it is 5763).

If you have a diverse portfolio... great. That's exactly what you should have. Nowhere did I even begin to imply that you liquidate your diverse portfolio... I only ever discussed the FTSE - and once the discussion got more detailed than a throw away "sell sell sell" comment, I pointed very much to the first week of March being one of the "once in a blue moon" occasions that are like the exceptions that prove the rule (so to speak). At that point it would IMO have been correct to ignore the usual "stick with it" advice- as I've argued in detail. That should not be portrayed as "panicking"... but cold and calculating. As I said to Loathsome.. I agree with your approach 99% of the time. I agree that certain crises come and go. Terrorist attacks, elections, Brexit results etc... and I accept that it is best for the long term (pension) investor to take a breath and take the rough with the smooth.

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I mean... really. On that first week of March... the FTSE had fallen from about 7400 to about 6700 in a fortnight. Italy had had about ten places in total lockdown for a fortnight, and industry was being affected. [I know one of our investments was put on hold because our machinery was stuck in northern Italy for repair... and these sorts of difficulties were already widely reported]. The Paris, Rome, Tokyo (and many more) marathons were cancelled as the need for 'social distancing' was becoming clearer and clearer. Holidays were cancelled... and huge swathes of flights were being cancelled, with those flights that took off often barely half full. Serie A and other leagues were suspended... and 6-Nations matches.... and much much more. Don't you think that any professional investor should be seeing where that was leading? What possible risk was here to liquidating FTSE shares at that point?

Preachs PA

So I’ve sat on my hands and for now I’m about back even despite seeing swings that are in the high 20 percents% during this. But for once I think leaving things to fate may be wrong. He’s not perfect but if Buffett is selling his bank stocks it doesn’t feel a positive time to be in those sectors